Exempted Services_Negative list_Goa_06072012

Exempted Services
Service Tax – Negative List based taxation
Goa Chamber of Commerce and Industry
July 7, 2012
Services
Not to scale
Illustrative only
Negative List vs. Exempted Services
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Negative List Services are the services which are out of
the ambit of chargeability of service tax
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Exempt Services are services which are prima facie
taxable, but exempt from payment of service tax, which
may be general or subject to conditions
Notifications to be discussed
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Notification No. 25 / 2012 – Service Tax dated 20.06.2012
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Notification No. 26 / 2012 – Service Tax dated 20.06.2012
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Notification No. 12 / 2012 – Service Tax dated 17.03.2012
Notification No. 13 / 2012 – Service Tax dated 17.03.2012
Notification No. 14 / 2012 – Service Tax dated 17.03.2012
Notification No. 30 / 2012 – Service Tax dated 20.06.2012
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Notification No. 15 / 2012 – Service Tax dated 17.03.2012
WEF 01.07.2012
Notification No. 25 / 2012
Exemptions
Classification of Exemptions
Exemption based on
nature of service
Service
provider
Exemption based on class
of service provider
Recipient
Service – AN
ACTIVITY
Exemption based on class
of recipient of service
Based on Nature of Service
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Renting of religious places or for conduct of religious ceremony
Legal services
Training and coaching in recreational activities
Sponsorship of tournaments or championships
Erection, construction ….. of specified properties or original works
Copyright services in specified circumstances
Renting specified properties for residential or lodging purposes
Transportation of goods by rail or vessel from one port to another in
India
GTA services for specified goods
Hiring of motor vehicle
Based on Nature of Service
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Transport of passengers in specified cases
Parking of motor vehicles
Distribution or marketing of mutual funds
Distributor or marketing of sim cards or recharge coupon vouchers
Selling or marketing of lottery tickets
General insurance business under specified schemes
Job work in specified cases
Business exhibitions held outside India
Making telephone calls from specified phones
Slaughtering of bovine animals
Business transfer
Public conveniences
Based on Nature of Service Provider
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By a clinical establishment / para medics / auth medical practitioner
By a Veterinary clinic
By an entity registered under 12AA of Income Tax Act
Clinical trials by CRO approved by DCG
By individual player, refree, umpire, coach or manager
By a recognized sports body
By a performing artist in folk or classical forms
By an independent journalist, PTI or UNI
By a restaurant, eating joint or a mess
By an incubatee
By an unincorporated body or an entity registered as society
By Public libraries
By ESIC
By Govt. Authority
Based on Nature of Recipient
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To UN or specified international organisations
To Government or Local Authority / Govt. Authority
To an educational institution
To a GTA
To a stock broker
To member of commodity exchange
To banking company or an insurance company
To an entity registered under Section 12AA
UN or Specified International Organization
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All taxable services provided by any person, to the
United Nations or Specified International Organization
is exempt from whole of service tax.
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Hitherto, exempt vide Notification No. 16/2002 –
Service Tax dated 2nd August, 2002.
Health care services
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Health Care Services provided by:
1. Clinical establishment
2. Authorised medical practitioner
3. Para-medics
is exempt from whole of service tax.
Hitherto, exempt vide Notifn No. 30/2011 – Taxable
services under Section 65(105)(zzzzo)
Veterinary clinic
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Services of veterinary clinic in relation to health care
of animals or birds is fully exempt from service tax.
Charitable Institutions / Trust
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All services by way of charitable activities provided
by an entity registered u/s 12AA of the Income Tax
Act, 1961 is fully exempt from service tax.
Renting of religious places
Service rendered by a person by way of:
a)
Renting of precincts of a religious place meant for
general public; OR
b)
Conduct of any religious ceremony
is fully exempt from service tax
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Hitherto, exempt under the category of mandap keeper
vide Notifn No. 14/2003
Legal services
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Services provided by:
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An arbitral tribunal (Hitherto, exempt vide Notifn No. 45/2011)
 To any person other than a business entity
 To a business entity with turnover upto Rs. 10 lakhs
An individual as an ADVOCATE / PARTNERSHIP FIRM by way of
legal services:
 To an advocate / partnership firm of advocates
 To any person other than a business entity
 To a business entity with turnover upto Rs. 10 lakhs
A person represented on an arbitral tribunal to the arbitral
tribunal
is fully exempt from service tax.
Clinical Trials
Services provided by an approved CRO by way of:
• technical testing
OR
• analysis
of newly developed drugs, including vaccines and herbal
remedies on human participants is fully exempt from
service tax.
Hitherto, exempt vide Notifn No. 11/2007
Training or coaching
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Services by way of training or coaching in recreational activities
relating to arts, culture or sports is fully exempt
Hitherto – partly excluded and partly exempt – vide Notifn No. 24/2004 –
Taxable under the category of ‘commercial training or coaching services’.
What about?
Computer training (Hitherto under Notifn No. 24/2004)
Vocational training (Hitherto under Notifn No. 23/2010 and 24/2004) – Is
under negative list under Section 66D(L)
Pre school education – Under negative list
Training for grant of certificate / diploma / degree – Under negative list
Curriculum – No. 10/2003 – under Section 66D(L)
Educational Institutions
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Services provided TO / BY an educational institution
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Auxiliary educational services
Renting of immovable property
Recognised sports body
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Services provided to a recognised sports body by:
1.
An individual player, referee, umpire, coach or
team manager
2.
Another recognised sports body
is exempt from service tax
Hitherto, exempt vide Notifn No. 30/2010
Sponsorship
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Services by way of sponsorship of SPORTING EVENTS
organised by the notified board / scheme /
association is fully exempt from service tax
To Govt. / Local Auth / Govt. Auth
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Construction, erection, commissioning, installation, completion, fitting
out, repair, maintenance, renovation or alteration
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Civil structures for other than commerce, industry or profession
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Historical monuments, archaeological sites
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Structure meant for use as educational, clinical or an art or cultural
establishment
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Canal (Circular No. 116/10/2009 read with Notifn No. 41/2009), dam (Excluded)
or other irrigational works
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Pipeline, conduit or plant for water supply, water treatment &
sewage treatment.
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Residential complex for self use or use of employees (F No.
332/16/2010 – TRU dated 24.05.2010)
Construction….
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Construction, erection, commissioning, installation, completion, fitting
out, repair, maintenance, renovation or alteration
 Road, bridge, tunnel, or terminal for road transportation for use by
general public;
 Civil works or any original works under JNNURM
 Building owned by an entity registered u/s 12 AA of the Income tax
Act, 1961 and meant predominantly for religious use by general
public;
 Pollution control or effluent treatment plant; or
 Structure for funeral, burial or cremation of deceased;
Hitherto, roads were exempt vide Notifn No. 24/2009 and site
formation, clearing activities etc vide Notifn No. 17/2005
Erection or const - original works
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Erection or Construction
 Airport, port or railways including monorail / metro
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Hitherto airport under WCT vide Notifn No. 10/2011 and ports
under WCT vide Notifn No. 11/2011 and construction activities
under 38/2010 and 27/2007
Single residential unit as part of residential complex
Low- cost houses
Post- harvest storage infrastructure for agricultural
produce
Mechanised food grain handling system, machinery or
equipment for units processing agricultural produce
Copyright
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Temporary transfer or permitting the use or
enjoyment of a copyright relating to:
1.
Original literary
2.
Dramatic
3.
Musical
4.
Artistic works
5.
Cinematograph films
is exempt from service tax
Performing artist
Services by a performing artist in folk or classical art
forms of:
1. Music; or
2. Dance; or
3. Theatre
is fully exempt from service tax
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Exception to the above is the services provided by
such artist as a brand ambassador (TAXABLE)
Collecting or providing news
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Services by way of collecting or providing news by:
1.
An independent journalist
2.
Press Trust of India
3.
United News of India
is fully exempt from service tax.
Hitherto, exempt under the category of computer
network services vide Notifn No. 13/2010
Renting of hotel, inn, etc.
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Services by way of renting of a hotel, inn, guest
house, club, campsite or other commercial places
meant for residential or lodging purposes, having
declared tariff of a unit of accomodation below Rs.
1000/- per day or equivalent
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Hitherto, exempt vide Notifn No. 31/2011 – Short
term accommodation services
What if the renting is for more than 3 months?
Serving of food or beverages
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Services provided in relation to serving of food or
beverage by a restaurant, eating joint or a mess
which has a licence to serve alcoholic beverages but
which do not have the facility of air-conditioning or
central air heating is exempt from service tax
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Hitherto, excluded from the definition of ‘restaurant
services’ under Section 65(105)(zzzzv)
Transportation of notified goods
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Services by way of transportation by rail or a vessel
from one place in India to another of the notified
goods is exempt from service tax
Goods Transport Agency
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Services provided by a GTA by way of transportation
of fruits, vegetables, eggs, milk, food grains or pulses
in a goods carriage
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Hitherto, exempt vide Notifn No. 33/2004
Goods Transport Agency
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Services provided by a GTA by way of transportation
of goods where gross amount charged:
 on a consignment in a single goods carriage does
not exceed Rs. 1,500/- or
 for a single consignee in the goods carriage does
not exceed Rs. 750/-
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Hitherto, exempt vide Notifn No. 34/2004
Providing on hire
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Services by way of giving on hire:
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Motor vehicles meant to carry more than 12
passengers to a state transport undertaking; or
•
A goods carriage to a goods transport agency;
is exempt from service tax
Transport of passengers
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Transport of passengers with or without accompanied
belongings by:
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Air, embarking from or terminating in an airport
located in notified North eastern states; or
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A contract carriage for the transportation of
passengers excluding tourism, conducted tour,
charter or hire
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Ropeway, cable car or aerial tramway
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Hitherto, exempt vide Notifn No. 27/2010 and 20/2009
Motor vehicle parking
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Services by way of vehicle parking to general public
is exempt from service tax.
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No exemption if the leasing of space is given to an
entity for providing such parking facility.
To Govt. / Local Auth / Govt. Auth
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Activity in relation to function entrusted to
municipality
In relation to water supply, public health, sanitation
conservancy, solid waste management or slum
improvement and upgradation
Repair of a ship, boat or vessel;
Effluents and sewerage treatment;
Waste collection or disposal;
Storage, treatment or testing of water for drinking purposes; or
Transport of water by pipeline or conduit for drinking purposes;
General insurance business
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Services of general insurance business provided
under the notified schemes is exempt from service
tax.
Incubatee Services
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Services provided by an incubatee up to a total
turnover of Rs. 50 Lakh in a financial year subject to
the prescribed conditions is exempt from service tax.
Hitherto, exempt vide Notifn No. 10/2007 for TBI, STEP
and NSTEDB
Unincorporated body
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Service by an unincorporated body or non-profit orgn
To its own members
By way of reimbursement of charges or share of
contribution
For the following:
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As a trade union
Carrying out any activity which is exempt from payment of
service tax
Upto Rs. 5,000 per month per member in a housing society
or a residential complex
Service provider based
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1.
2.
3.
Services by following persons in respective capacities :
a sub-broker or an authorised person to a stock
broker; (hitherto, exempt vide No. 31/2009)
an authorised person to a member of a commodity
exchange;
a mutual fund agent to mutual fund or asset
management company;
Service provider based
4.
5.
6.
7.
a selling or marketing agent of lottery tickets to a
distributer or a selling agent; (Hitherto, exempt vide
No. 50/2010)
a selling agent or a distributer of SIM cards or
recharge coupon vouchers; or
a business facilitator or a business correspondent to
a banking company or an insurance company in a
rural area;
Sub contractor providing services by way of works
contract to another contractor providing works
contract services which are exempt;
Intermediate production
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Carrying out an intermediate production process as
job work in relation to notified goods / processes is
exempt from service tax.
Hitherto, exempt vide Notifn No. 14/2004
Business exhibition
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Services by an organiser to any person in respect of a
business exhibition held outside India is exempt
from service tax.
Hitherto, exempt vide Notifn No. 5/2011
Telephone calls
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Services by way of making telephone calls from:
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departmentally run public telephone;
•
guaranteed public telephones operating only for
local calls; or
•
free telephone at airport and hospitals where
no bills are being issued
is exempt from service tax
Hitherto, exempt vide No. 3/1994
Slaughtering of bovine animals
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Services by way of slaughtering of bovine animals is
exempt from service tax
By persons located in NTT
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Services provided by a service provider located in a
non- taxable territory to:
•
the
Government,
Local
Authority
or
Governmental Authority
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An individual in relation to any purpose other
than industry, business or commerce; or
•
an entity registered under section 12AA of the
Income tax Act, 1961 for the purposes of
providing charitable activities; or
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A person located in non-taxable territory
Public libraries
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By public libraries
By way of lending books, publications or any
other knowledge enhancing content or material
ESIC
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By ESIC
To persons governed under the ESI Act
Business transfer
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By way of transfer of a going concern, as a whole
or an independent part thereof
Public conveniences
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By way of public conveniences
Such as facilities of bathroom, washrooms,
lavatories, urinal or toilets
By Govt. Authority
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By way of an activity in relation to function
entrusted to a municipality under Article 243 of
the Constitution
Notification No. 14 / 2012
Partial Exemptions
R&D Cess
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Exemption to the extent R&D Cess paid on
transactions involving import of technology
 Subject to the condition that R&D Cess is paid
within 6 months from the date of invoice OR within
6 months from the date of credit in the books
(associated enterprise)
Are all existing exemptions
continued under the new scheme?
Other existing exemptions !!!
 Service provided to SEZ developers / units in SEZ vide
Notifn No. 40/2012
 Notifn No. 17/2011 read with Notifn No. 52/2011
 Distribution of electricity
 Notifn No. 32/2010 and Notifn No. 11/2010
 Under negative list under Section 66D(K)
 Manufacturers of alcoholic beverages / medicinal
preparations with alcohol
 Notifn No. 39/2009 / Notifn No. 32/2009
 Under negative list under Section 66D(F)
Other existing exemptions !!!
 Transportation of Coastal goods
 Notifn No. 30/2009
 Under negative list under Section 66D(P)
 SSI Scheme vide Notifn No. 33/2012
 Notifn No. 6/2005
 All services provided by RBI
 Notifn No. 22/2006
 Under negative list under Section 66D(B)
Other existing exemptions !!!
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To the extent of air freight included in the value of goods
reckoned for customs
 Notifn No. 9/2011
Packaged / Canned software when ED paid / when
licensed for single use
 Notifn No. 53/2010 / Notifn No. 2/2010
Specified services when wholly provided within the Port /
Airport
 Notifn No. 41/2010 and Notifn No. 31/2010
Air transport of passengers embarking in India for
domestic / international journeys
 Notifn No. 26/2010 (based on the value of tickets)
Other existing exemptions !!!
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Air transport services provided to passengers in transit
through India
 Notifn No. 25/2010
ECIS for food grain handling, cold storage, agriculture….
 Notifn No. 12/2010
TTA services for seed testing – by Central / State seed
testing Labs
 Notifn No. 10/2010
Transportation of specified goods by Rail
 Notifn No. 8/2010
Other existing exemptions !!!
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Inter-bank transactions of purchase and sale of foreign
currency, provided to a Scheduled bank, by any other
Scheduled bank
 Notifn No. 19/2009
Services provided for personal use of diplomatic agents or
career consular officers
 Notifn No. 34/2007
Right to exhibit a cinematograph film
 Notifn No. 12/2007
Other existing exemptions !!!
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Transport of export goods by aircraft
 Notifn No. 29/2005
Collection of duties and taxes by the Banks
 Notifn No. 13/2004
Specified services provided to GTAs
 C&F, MPS, Cargo handling, S & W, BAS, Packaging, SSBC
and supply of tangible goods
 Notifn No. 1/2009
Notification No. 26 / 2012
Partial Exemptions
Partial Exemption
Sl.
No
Description of taxable service
1
Taxable Portion (in %)
Proposed
Existing
Financial leasing services including hire
purchase
10
10
2
Transport of goods by rail
30
30
3
Transport of passengers, with or without
accompanied belongings by rail
30
N.A
4
Supply of food or drink, in any premises,
including renting (hotel, convention centre,
club, pandal, shamiana or any place specially
arranged for organizing a function)
70
30
5
Transport of passengers by air, with or
without accompanied belongings
40
NA
Partial Exemption
Sl.
No
Description of taxable service
6
Taxable Portion (in %)
Proposed
Existing
Renting of hotels, inns, guest houses, clubs,
campsites or other commercial places meant
for residential or lodging purposes.
60
50
7
Transport of goods by road by Goods
Transport Agency (GTA)
25
25
8
Services provided in relation to chit
70
70
9
Renting of any motor vehicle designed to
carry passengers
40
40
10 Transport of goods in a vessel from one port
in India to another
50
75
11 By aircraft operators for scheduled / unsch air
transport of passengers embarking in India
NA
40
Partial Exemption
Sl.
No
Description of taxable service
12
Taxable Portion (in %)
Proposed
Existing
Service provided / to be provided by a tour
operator in relation to a package tour.
25
25
13
Service provided / to be provided by a tour
operator limited to providing services solely
of arranging or booking accommodation.
10
10
14
Other tour operator service not covered
above
40
40
15
Construction of complex, civil structure –
including the value of land
25
25
Notification No. 30 / 2012
Persons liable to pay tax
Is this an exemption for the service provider?
Onus to discharge
In specified cases, the
liability to discharge
service is tax is vested with
the recipient of services
Prima facie, liability to
discharge is that of the
service provider
Service
provider
Recipient
Service – AN
ACTIVITY
Proposal to divide the responsibility between
the provider and recipient of services
Onus to discharge
Sl. No.
Description of a service
% of tax payable by
Provider
Recipient
1
Insurance agent
Nil
100
2
Transport of goods by road by a GTA
Nil
100
3
Sponsorship
Nil
100
4
Arbitral tribunal
Nil
100
5
Individual advocate
Nil
100
6
Support service by Government or local
authority excluding renting, and
negative list services
Nil
100
7
Services provided by any person who is
located in NTT and received by any
person located in the taxable territory
Nil
100
Onus to discharge
Sl. No.
Description of a service
% of tax payable by
Provider
Recipient
8
Renting or hiring any motor vehicle
designed to carry passenger on abated
value
Nil
100
9
Renting or hiring any motor vehicle
designed to carry passenger on non
abated value
60
40
10
Supply of manpower for any purpose
25
75
11
Works contract
50
50
Questions ?
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Is this joint and several?
Is this optional?
What if the other person has paid?
What if the provider is not registered?
What is the recipient is not registered?
What is the provider has not charged?
What if the valuation adopted by the provider is
incorrect?
Thank you
Badrinath NR
Partner, Singhvi, Dev & Unni
[email protected]
+ 91 80 2226 1371